US accuses China of breaking trade truce amid rare earth dispute

The United States has accused China of betraying a fragile trade truce reached earlier this year, in a sharp escalation of rhetoric between the world’s two largest economies.

In a rare joint appearance in Washington, US Trade Representative Jamison Greer and Treasury Secretary Scott Besent condemned Beijing’s decision to tighten export controls on rare earth materials, calling the move an act of “economic coercion” and a “power grab” aimed at controlling global supply chains.

“If China wants to be an unreliable partner to the world, the world will have to break up,” Besant said on Wednesday.

The unusually direct comments highlight growing tension between Washington and Beijing ahead of an expected meeting between President Donald Trump and Chinese President Xi Jinping later this month.

China processes about 90% of the world’s rare earth metals and magnets, materials critical to the manufacture of smartphones, electric vehicles, wind turbines, and advanced defense technologies.

Under new rules announced last week, foreign companies will need Chinese government approval to export products containing even small amounts of rare earth elements, and must disclose their intended use. Beijing has also moved to restrict exports of graphite and lithium batteries, key components of electric vehicles and consumer electronics.

Greer described the scope of the measures as “unimaginable,” adding that it was “unclear whether such comprehensive controls could be implemented in practice.”

“We are witnessing a level of excess that the global economy cannot absorb,” he said.

In response, President Trump has threatened to impose 100% tariffs on all Chinese imports starting next month, and is preparing new export restrictions on critical US software. Greer confirmed that these procedures are currently being drafted.

The two sides have already imposed new port fees on the other’s ships this week – a symbolic but tangible sign of escalating tensions.

Pisant said the White House has already received calls from US automakers concerned about potential supply shortages.

“This is China versus the world,” he added. “We and our allies will not be ordered or controlled. We will not allow a bunch of bureaucrats in Beijing to try to manage the global supply chain.”

While his tone was combative, Besant also hinted that diplomacy was still possible: “I think China is open to discussion, and I am optimistic that the escalation can be de-escalated.”

The latest escalation threatens to unravel the trade truce the two sides reached in May, which suspended tariffs of up to 145% and effectively froze bilateral trade.

Since then, US imports of Chinese goods still face an average 30% tax, while Beijing imposed new 10% tariffs on US exports — a delicate relief that analysts say has always been vulnerable to political pressure.

Greer said the United States has “reduced tariffs since then,” but accused China of “expanding export controls” rather than reciprocating.

Analysts warn that a renewed trade war between the United States and China could disrupt global supply chains that are already under pressure due to geopolitical tensions, volatile energy prices, and slowing global demand.

“Rare earths are the backbone of modern manufacturing – from semiconductors to renewable energy,” said Lydia Grant, a senior fellow at the Atlantic Economic Council. “If this turns into a tit-for-tat conflict, the repercussions will extend to every sector that relies on advanced technology.”

Both governments face internal pressure to appear tough before important political moments, with Trump keen to show economic strength before next year’s elections, and Beijing focused on supporting its slowing economy amid weak industrial production and youth unemployment.

For now, both sides say they are open to talks. But as Besant warned, “substantial measures” remain on the table if China does not roll back its latest export controls.